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59 Cards in this Set
- Front
- Back
Any transaction in which money or a money-like instrument is exchanged for other money or another money-like instrument.
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Finance
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Any organized effort through which buyers and sellers freely exchange goods and services.
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Market
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Market that deals with finance.
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Financial Marketplace
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The three primary participants in the financial marketplace.
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Individual households, businesses, and the government
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The primary savers of funds and the suppliers of funds in our free enterprise financial-market system.
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Individual households
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The users of funds in the financial-market system.
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Businesses and the government
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The central theme of economics.
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Scarcity
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In both business and economics, the four types of scarce resources of typical concern.
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Natural, human, capital, and entrepreneurial resources
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Consist of products such as minerals, land, and wildlife; sometimes referred to as "land".
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Natural Resources
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The mental and physical talents of people; sometimes referred to as "labor".
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Human Resources
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Used to denote the addition of one more unit of measurement; an incremental change.
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Marginal
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The additional revenue we obtain by selling one more unit of product to create an incremental increase in revenue.
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Marginal Revenue Product
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The additional product that reults from hiring one more unit of labor.
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Marginal Physical Product
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The incremental cost of hiring one more unit of labor or the incremental cost of producing one more unit of output.
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Marginal Cost
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Seperated into two categories that include economic capital and financial capital.
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Capital Resources
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Those items that people manufacture by combining natural and human resources; sometimes referred to as physical capital or fixed assets.
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Economic Capital
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May include several types of assets (cash, accounts receivable, stocks, bonds) as it is a dollar-value claim on economic capital.
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Financial Capital
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The primary payment for economic and financial capital.
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Interest
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Individuals who assume risk and begin business enterprises.
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Entrepreneurial Resources
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The economic paid to the entrepreneur.
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Profit
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When a decision to invest funds is made, the highest value surrendered is... (a quantifiable term).
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Opportunity Cost
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All the money received from all sources during a year, including wages, tips, interest, bonds, rental income, and profits andis subject to taxation by the government.
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Gross Income
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Payments to the government for goods and services provided by the government.
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Taxes
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A larger percentage of income is taken as that income increases.
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Progressive Taxation
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A higher percentage of income is taken as that income decreases.
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Regressive Taxation
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The percentage of income taken is the same regardless of income.
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Proportional Taxation
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Up to a certain limit, there is no tax paid until that limit is reached, at which point a flat rate is applied to all income above the stated limit; is actually a progressive tax proposal.
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Flat-Tax Proposal
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The left over income after taxation.
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Disposable Income
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The income left over after fixed expenses such as rent, utilities, and insurance have been paid.
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Discretionary Income
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Use of Discretionary Income (as opposed to saving).
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Consumption; or spending
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A principal amount of money that is exchanged for a promise to repay the amount, plus interest.
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Loan
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Determines the amount of interest paid on the principal amount of a loan.
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Interest Rate (in effect at the time of the loan)
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The five primary factors that affect interest rates...
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Supply of money saved, demand for borrowed money, Federal Reserve Policy, inflation, and risk.
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The total money that is placed in demand deposit (checking) accounts, savings accounts, and money market mutual funds.
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Supply of money saved
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States that as the payment for, or the price, of an item increases the quantity of the item supplied to the market will increase.
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Law of Supply
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Generated by determining how much of a product or service people or businesses would be willing and able to provide to the market at various prices.
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Supply Table
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Created from the data of a supply table by horizontally summing the total money saved at varying interest rates.
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Supply Curve
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Four measures of the money supply in the United Staes.
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M1, M2, M3, and L
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Consists mostly of money in circulation and money in checking accounts (demand deposits)
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M1
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Includes M1 plus money in passbook savings accounts, retail money market accounts, and small time deposits.
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M2
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All the money that is demanded in our economy at a given price.
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Demand for borrowed funds
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States that as the price of an item decreases, people will demand a larger quantity of that item.
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Law of Demand
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Generated by determining how much individuals are willing to borrow at varying interest rates.
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Demand Table
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The horizontal summation of a demand table.
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Demand Curve
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The interest rate at which the supply and demand cruves intersect.
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Equilibrium Point
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The central bank of the United States, responsible for controlling the monetary policy of the U.S.
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Federal Reserve (Fed)
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Governmental action to change the supply of money to expand or contract economic activity.
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Monetary policy
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The three basic goals of the Federal Reserve.
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Economic growth, price stability, and full employment
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When the average price of goods increases.
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Inflation
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Represents a market basket of goods that the average American consumer purchases each month; most often used measure of inflation.
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Consumer Price Index (CPI)
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The three primary tools the Federal Reserve uses to control the money supply:
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Open Market Operations, Bank Reserve Requirements, and the Discount Rate
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Consist of the Fed purchasing or selling U.S. securities; the most significant tool of the Fed, is in constant use.
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Open Market Operations
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Established percentage of deposits placed in banks that must be maintained to conduct daily operations and that cannot be used for lending purposes; seldom used.
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Reserve Requirement
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The rate of interest that the Fed charges banks to borrow money from the Fed.
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Discount Rate
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The banking industry considers the Fed...
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The Lender of Last Resort
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The probability that the actual return on an incestment will be different from the desired return; an individual's tolerance for investments.
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Risk
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Associated with economic, political, and sociological changes that affect all participants on an equal basis.
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Systematic Risk
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Unique to an individual, firm, or industry.
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Unsystematic Risk
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That rate charged by banks to their best customers.
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Prime Lending Rate
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